Takin on the real world

Carrying on the fine tradition discussed here on Tuesday, the city of Santa Barbara continued this week in their effort to defy the basic tenets of economics and the free market. The Santa Barbara City council that very night approved a "living wage law."

Firms in Santa Barbara who conduct business with the city will now be required to pay their employees higher wages: Once the ordinance goes into effect later this year, companies who have contracts with the city of more than $15,000 will have to pay their workers a living wage, ranging from $14 if they pay no health benefits to $12 an hour if they pay individual employee benefits, or $11 an hour if family benefits are provided. The council is expected to formally adopt the ordinance in the coming weeks, after the staff makes some technical changes.

One councilwoman described the results this way: "To me, this is what democracy looks like," said Councilwoman Helene Schneider. "This is about coming together to decide what fits for Santa Barbara."

Well, I imagine that's a matter of perspective. The usual critics were present as well and made the usual arguments against the law:

-Opponents argued that government should not meddle in the affairs of private business. Forcing private companies to pay higher wages will result in layoffs of workers in entry-level positions, they said. They also said that municipal unions will now demand a living wage for all of their workers and that activists would come back with a citywide ordinance for all businesses.

-Terry Tyler, a small-business owner and unsuccessful candidate for City Council, said the living wage is anti-business and will drive more companies out of the area.

I understand the concept of the living wage law and in the abstract it is a good idea. Sadly though it is one that you're hard pressed to show me will survive contact with reality. The laws of economics are hard and fast--when you monkey with markets, such as this ordinance does, you suffer many an un-intended consequence.

All that to say, I don't think that people who struggle to live and work in Santa Barbara shouldn't earn a decent living. The issue is not that; the problem is that Santa Barbara has no idea how to solve this problem, as the LA Times' Tuesday story makes all too clear.

Many may complain that the criticism of the new law is old and tired, focused only on helping business. That may be so but there's far more evidence in that town supporting that kind of market-focused argument than there is in favor of manipulating markets from the outside.